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Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders |
Last Updated: 2 August 2005
REFERENCE: 0437-2005
ORDER OF AN ADJUDICATOR
MADE UNDER
PART 9 OF CHAPTER 6
BODY CORPORATE AND COMMUNITY MANAGEMENT ACT
1997
|
Number of Scheme:
|
11476
|
|
Name of Scheme:
|
Aarons
|
|
Address of Scheme:
|
3355 Gold Coast Highway SURFERS PARADISE QLD 4217
|
TAKE NOTICE that pursuant to an application made under the abovementioned Act
by Kathryn Margaret James, the co-owner of lot 1
|
I hereby order that due to the failure of the body corporate
committee of Aarons to comply with the requirements of Division 4, sections 22A
– D
of the Accommodation Module following the AGM held on 28 April 2005,
that both the:
• Committee meeting held on 20 May 2005; and are invalid and of no effect, and all resolutions purportedly
carried at the EGM on 24 June 2005 shall not be implemented or otherwise
acted
upon.
I further order that within six (6) weeks of the date of this order, the body corporate of Aarons shall convene and hold an EGM as required by Division 4, sections 22A – D of the Accommodation Module (the meeting) in order that the body corporate may elect or appoint the "required number" of members to its committee. I further order that the provisions of sections 23D and 23E of the Accommodation Module shall apply to the meeting and that the secretary and chairperson shall fully comply with the requirements of those sections in relation to the contents of the notice of meeting and the procedures at the meeting for the election of additional committee members, if such election is required in the event of more that 6 eligible persons being nominated for ordinary member positions on the committee. I further order that if 2 but not more than 6 eligible persons are nominated for the committee, then the meeting shall appoint these persons to be on the committee in accordance with section 22C(1) of the Accommodation Module without the need for there to be an election. I further order that with the notice of meeting and agenda required to be given in respect of the meeting to be held in accordance with the terms of this order, the secretary shall forward to all owners a full copy of this order (including the accompanying statement of Adjudicator’s reasons for decision which includes as an annexure a copy of my letter to S Shilling of 15 June 2005 explaining my views that owners have a responsibility to participate in the management of their schemes. |
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF
0437-2005
"Aarons" CTS 11476
The application
The applicant, Kathryn Margaret James, the
co-owner of lot 1, has sought the following orders of an adjudicator under the
Body Corporate and Community Management Act 1997 (the Act) quote
–
The commissioner invalidate the committee meeting held on 20 May 2005 and cancel / postpone the proposed EGM called for 24 June 2005 pending the outcome of dispute resolution application ref No: 0076-2005.
The
applicant has also sought an interim order, quote:
The commissioner invalidate the committee meeting held on 20 May 2005 and cancel / postpone the proposed EGM called for 24 June 2005 pending the outcome of dispute resolution application 0076-2005.
The
scheme
The scheme is a subdivision of 44 lots recorded under a
building unit plan (now a building format plan) of subdivision. The regulation
module applying to the scheme is the standard module.
Jurisdiction
Section 276(1) of the Act provides
that an adjudicator may make an order that is just and equitable in the
circumstances (including a declaratory
order) to resolve a dispute, in the
context of a community titles scheme, about-
(a) a claimed or anticipated contravention of the Act or the community management statement; or
(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or
(c) a claimed or anticipated contractual matter about-
(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or
(ii) the authorisation of a person as a letting agent for a community titles
scheme.
An order may require a person to act, or prohibit a person from
acting, in a way stated in the order (section 276(2)). An adjudicator's
order may contain ancillary and consequential provisions the adjudicator
considers necessary or appropriate (section 284(1)). Section 276(1)
of the Act provides that an adjudicator may make an order that is just and
equitable in the circumstances (including a declaratory
order) to resolve a
dispute, in the context of a community titles scheme, about-
(a) a claimed or anticipated contravention of the Act or the community management statement; or
(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or
(c) a claimed or anticipated contractual matter about-
(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or
(ii) the authorisation of a person as a letting agent for a community titles
scheme.
An order may require a person to act, or prohibit a person from
acting, in a way stated in the order (section 276(2)). An adjudicator's
order may contain ancillary and consequential provisions the adjudicator
considers necessary or appropriate (section 284(1)).
Interim
order
Section 279(1) provides that an adjudicator may make an
interim order if satisfied, on reasonable grounds, that an interim order is
necessary because
of the nature or urgency of the circumstances to which the
application relates.
In any consideration of an application which seeks
the making of an interim order, it is necessary to determine at the outset
whether,
because of the nature or urgency of the circumstances relating to the
application, an interim order is in fact necessary or appropriate.
The examples
included in the Act under section 279(1) are suggestive of the usual
circumstances where an interim order might be made. Both examples are in the
nature of injunctive relief.
Whilst the range of matters which might be the
subject of an interim order is not capable of definition, the applicant does
need
to establish that the circumstances of the application warrant the making
of an interim order.
An interim order will not be made, or will be
refused, in circumstances where the only urgency relates to the
applicant’s desire
to resolve or expedite the matters in dispute, or where
the nature of the circumstances are such that the matter is not capable of
being
dealt with in the context of an interim order. Again, it is not possible to
define these circumstances. However, given that
an interim order may be made ex
parte (ie. without reference to, or submission from the respondent named in the
matter), then as
a guide, where the circumstances or matters in dispute include
matters or allegations not capable of objective consideration, or
ready
determination, or relate to issues of credibility or character, for example,
where an interim order would be inappropriate,
then the request for an interim
order will be refused. It is a matter for an adjudicator to determine in respect
of each application.
The nature of the matters raised are not such that
they can be effectively addressed or dealt with by way of an interim order.
Rather,
they require full investigation, including submission from the other
party to the dispute, before any order can be made. As well,
the interim order
sought is not in the nature of interim relief; rather it seeks a final
determination of the issues raised, but
by way of an interim order and not a
final order. The interim order sought is in exactly the same terms as the final
order sought.
Accordingly, the application for an interim order is dismissed.
The respondents
The named respondents to this application
is the body corporate for Aarons, Mark Howard and Kim Elliott. An owner can be
in "dispute"
with their body corporate. However, there is no ability for an
owner to be in dispute with the body corporate manager for the scheme,
in this
case Kim Elliott. Consequently there is no jurisdiction for the naming of
Elliott as a respondent.
There is jurisdiction for a "dispute" between
an owner and an owner. However, the term "owner" is defined to mean a person in
the
person’s capacity as the owner of the lot. The applicant’s
dispute with Mr Howard relates more so to his actions as a
committee member, and
not as an owner. Consequently, again there is no jurisdiction for the naming of
Howard as a respondent.
Given there is no jurisdiction for the
applicant being in dispute with either Elliott or Howard, then I am satisfied
that the failure
to seek submissions from these parties specifically will not
constitute a denial of natural justice to these parties. No orders will
be made
against either Elliott or Howard specifically.
"All owners" are
specified as persons who might be affected if an order sought is made. I am
satisfied that the failure to specifically
seek a submission from all owners,
given the time period this would have required, does not constitute a denial of
natural justice.
Submissions
The application was received by facsimile after close of business on
Thursday 16 June 2005. The applicant sought a determination in
respect of the
extraordinary general meeting to be held on 24 June 2005 (the meeting). In
investigating an application an adjudicator
is required to observe natural
justice (section 269(2)(a) of the Act). Natural justice requires, amongst other
matters, the right
of a party (who might be affected if the order sought is
made) to be heard.
Given the nature of the orders sought, both interim
and final, there could be no avoidance of the requirement to seek a submission,
at least from the named respondent, the body corporate. Moreover, reasonableness
required that the body corporate be given sufficient
time to respond
appropriately to the application. The body corporate submission was received
Monday 27 June 2005, which is after
the meeting in question was held. In terms
of my ability to make orders affecting the meeting, this fact is really of no
consequence.
In my view, it is often preferable to allow a meeting, the validity
of which is in issue, to proceed, and to intervene with either
an interim order
placing the resolutions of the meeting in abeyance, or even, if the
circumstances so warrant, a final order invalidating
the meeting.
Specifically, a submission from the body corporate has been received.
There can be no doubt in my view, given the terms of that submission,
that it is
a response to all aspects of the application and not simply to the interim order
requested. The submission address’s
both the interim and final orders
sought and concludes, under the latter, that:
The EGM should not be delayed or cancelled and the owners are entitled to vote on how the building should be administered. ...
I
am satisfied that the body corporate has had sufficient opportunity to respond
to this application.
The dispute
In dispute is the
validity of both:
1. A committee meeting held on 20 May 2005 (the committee meeting);
2. An EGM held on 24 June 2005 (the meeting).
The committee
meeting proposed the calling of an EGM for the consideration of the motions
proposed at the committee meeting for presentation
to the body corporate in
general meeting. After listing the 8 motions, the committee (being Mark Howard
as chairperson, secretary
and treasurer) resolved to call an EGM (the meeting)
"for the purpose of submitting the proposed motions for owners consideration".
Clearly the meeting was notified to owners and presumably the meeting
was duly held on 24 June 2005, though I have not specifically
requested a copy
of the minutes of the meeting. I would assume however given the make up of
ownership that most, if not all, motions
proposed for consideration were duly
passed at the meeting.
The applicant seek the cancellation (ie.
invalidation) of the both meetings or at a minimum a postponement of the meeting
"pending
the outcome of dispute ... 0076 – 2005".
Application 76
of 2005 is another dispute involving this scheme I am presently investigating
and will ultimately adjudicate. The current
status of that application is that I
am presently awaiting a response by the applicant (in that application) to
certain issues which
I have raised in written correspondence dated 15 June 2005
(my correspondence). I note that the respondent body corporate, in its
submission, has relied on aspects of my correspondence to oppose or rebut the
final orders being sought in this application.
The applicant to this
application raises technical issues as to validity of the committee meeting (eg.
quorum). In the applicant’s
opinion, " Mark Howard has called the EGM to
hurry through motions fitting the agenda of Mark Howard, prior to a decision
being made
by the adjudicator relevant to the above dispute resolution". The
applicant then states:
The outcome of all motions will be decided by the controlling vote of Mark Howard, as has happened at previous committee meetings (as there has not been a quorum since December 2003) and general meetings.
The
applicant then goes on to discuss the merits of each proposed motion. I do not
intend to embark on a consideration of the merits
of each proposed motion. This
is not necessary, certainly, at this time.
If I were determining this
application based on the sufficiency of the applicant’s grounds, I would
have no hesitation in dismissing
this application. The applicant has failed to
make any case for the invalidation of the meetings. The applicant is wrong on
the question
of a quorum. If Mr Howard is at a committee meeting, then given
that he is the only member of the committee jointly holding the positions
of
chairperson, secretary and treasurer, then there is a quorum. Section 30(1) of
the accommodation module provides that a quorum
is "at least half the number of
voting members of the committee". Given that the
voting members of the committee
is presently one
(1), then on Mr Howard’s attendance at a committee
meeting there is a quorum.
What the applicant has failed to note is that
the committee does not presently "consist of the required number of members"
(see section
10(3)). The schedule to the accommodation module provides the
definition of "required number" –
"required number", of
members for a committee, means at least 3, but not more than the following
number of, voting members--
(a) if the scheme includes 7 or more
lots--7;
(b) if the scheme includes fewer than 7 lots--the number equalling
the number of lots.
The minutes of the AGM held on 28 April 2005 under
the heading Election of Committee state:
There being no other nominations received, the following persons were elected to the committee:
Chairman Mark Howard
Secretary / Treasurer Mark Howard
Consequently
following the 2005 AGM some two months ago, the committee of this body corporate
did not contain the required number
of members.
The applicant’s
only other ground for invalidation of the two meetings is that "the outcome of
all motions will be decided by
the controlling vote of Mark Howard, as has
happened at previous committee meetings (as there has not been a quorum since
December
2003) and general meetings".
I consider that the reason Mr
Howard controls the committee is because other owners, by their inaction (in
particular, their seeming
refusal to nominate for the committee when clearly
there are positions available) allow him to. This point was fully explained in
my correspondence to the applicant Shilling, a copy of which correspondence was
sent to all owners who choose to make a submission
in respect of that
application and which, for the benefit of all owners, I have annexed as an
annexure to this order. The failure
of other owners to nominate for the
committee is not Mr Howard’s fault or responsibility, and he should not be
penalised for
his preparedness to be a member of the committee. Moreover, it is
not my role to save owners from their own complacency or refusal
to become
involved. Clearly, there are consequences of such complacency.
As for
general meetings, clearly Mr Howard has or controls ownership of a majority of
lots in the scheme and is able to out vote minority
owners in the determination
of most resolutions. However, again, Mr Howard should not be penalised for this.
The applicant appears
to believe that simply because Mr Howard can control the
outcome of most resolutions, then that this is enough to warrant Mr Howard
being
denied the benefit of his majority ownership or control of lots. It is not, and
minority owners should be under no illusion
to this effect. In order for any
resolution carried on the majority vote of Mr Howard to be invalidated it must
be shown to offend
against the principles or requirements of the legislation.
The simple fact of majority ownership is not contrary to the principles
of the legislation. Rather it is a fact which other owners
must accept as part
of ownership in this particular scheme. What I am saying is that there is
nothing illegal in majority ownership
of lots. With majority ownership comes the
ability to control the outcome of perhaps most resolutions considered by the
body corporate.
The invalidation of resolutions carried on the basis of majority
ownership is not a matter taken or considered lightly by adjudicators.
It is not
sufficient to allege the simple fact of majority ownership. Rather, what is
required is to show that any resolution carried
by the body corporate on the
basis of a majority vote is not reasonable and for the benefit of owners of the
lots included in the
scheme. The onus of establishing this is not an easy one;
whilst the interests of the minority owners are a relevant consider, so
to are
the interests of the majority owner. There have been several pronouncements by
adjudicators of what might be required to establish
this onus. Suffice to say
that it will depend on the circumstances of each individual resolution carried.
I conclude this point by saying to minority owners in this scheme that
they will need to make a far more compelling case for invalidation
of
resolutions carried on the basis of majority ownership (based on considerations
of reasonableness and the resolution not being
for the benefit of owners
generally) than simply alleging the fact of majority ownership.
I
conclude this dispute therefore by stating that, based on the grounds advanced
by the applicant, I would not grant the relief sought.
The
requirements of the legislation
In my view, this body corporate is
currently acting outside the specific requirements of the legislation.
I
have already referred to the committee (of one, Mark Howard) elected at the last
AGM held two months ago, and the fact that other
owners failed to nominate for
the committee. Further, I have referred to the "required number" of members of
the committee. In the
case of this body corporate, this means at least 3 members
and not more than 7.
Mr Howard is only a single voting member of the
committee and has only one vote on the committee, notwithstanding that he holds
3
committee positions (see sections 10(2) and 31(3) of the Accommodation
Module). Consequently the committee of this body corporate
consists of one
voting member. The definition
of required number requires a minimum of three and
a maximum of seven voting members.
Currently, the committee does not consist of
the required number. What is the consequence arising from this.
This
issue was recognised and addressed in the 2003 amendments to the legislation,
specifically the Body Corporate and Community Management Legislation
Amendment Regulation (No. 1) 2003 which came into effect on 1 December 2003.
In the explanatory notes to that legislation, the following is set
out:
Firstly, under the heading Objectives and the sub heading
How policy objectives will be achieved and finally the headings Body
Corporate Committees – Committee elections:
(bolding is mine for
highlighting purposes)
Committee elections
The amendments make
additional provisions about the conduct of elections for committees, to address
some of the practices that have
arisen regarding stacking of committees, to the
advantage of a small number of owners or the body corporate manager or resident
manager.
The amendments include:
• If an owner owes a debt to the body
corporate, they cannot be nominated for committee membership, or nominate
another person
for committee membership. This is to prevent persons
who are
not fulfilling their financial obligations to the scheme from becoming committee
members.
• An owner can nominate only one person for committee
membership. This is to limit stacking of committees.
• However,
if there are insufficient nominations to fill all executive or ordinary member
positions, the chairperson may call
for nominations from the floor of the
general meeting. In this case, the restrictions on the number of nominations an
owner can make
are relaxed.
• If there are insufficient nominations
to achieve the minimum number of persons for a committee (three), and one
co-owner of
a lot has been elected, another co-owner can be nominated.
This
does not apply if there are three committee members.
• The
minutes must record the number of votes cast for each candidate, and a separate
tally sheet must record voting details.
This is to ensure that a proper record
of the voting is kept, but not
as part of the minutes.
• A
process is provided for situations where there are insufficient persons elected
to form a committee at an annual general
meeting, providing for those persons
who have been elected to
call a further general meeting for the
purpose of appointing additional members or engaging a body corporate manager to
act as the
committee.
• A process is provided for the filling of a
casual vacancy on the committee. This is to ensure that the committee is not
limited
in its ability to conduct its business due to the
vacancy.
Specifically the Accommodation Module has been amended by the
insertion of a new part 3, div 4A. The explanatory note accompanying
that new
division is as follows:
Insertion of new part 3, div
4A
Clause 20--Although section 23 provides for the filling of
casual vacancies, it makes no provision for the situation where an annual
general
meeting does not appoint sufficient persons to achieve the minimum
number required for a committee. If this occurs, or one or more
of the executive
member positions has not been filled, and the body corporate has not engaged a
body corporate manager under division
10, the appointed committee members are
required to hold a general meeting for the purpose of appointing additional
persons to the
committee or, if this fails, engaging a body corporate manager
under division 10.
The new provisions are set out in sections 22A-D of
the Accommodation Module, quote:
Division 4A--Appointment of
committee members at extraordinary general meeting following annual general
meeting--Act, s 99
22A Definitions for div 4A [SM, s 24]
In
this division--
"elected member", of a committee, means an executive
or ordinary member of the committee elected at a relevant annual general meeting
of the body
corporate.
"relevant annual general meeting" means an
annual general meeting of a body corporate, other than an annual general meeting
mentioned in section 12(2), at which--
(a) at least 1 person is elected as an
executive or ordinary member of the committee; and
(b) either--
(i) at
least 1 executive member position on the committee is not filled; or
(ii) the
total number of voting members of the committee elected is less than 3;
and
(c) the body corporate does not approve the engagement of a body
corporate manager under division 10.
22B Requirement to call
extraordinary general meeting [SM, s 24A]
(1) Within 1 month after
a relevant annual general meeting is held, the elected member of the committee
or, if there is more than 1 elected
member, the elected members of the committee
acting jointly, must call an extraordinary general meeting of the body
corporate.
(2) The extraordinary meeting must be held within 2 months
after the relevant annual general meeting.
(3) Section 59 does not
apply to the calling or holding of the extraordinary general
meeting.
22C Appointment of committee member at extraordinary general
meeting [SM, s 24B]
(1) At an extraordinary general meeting called
under this division, the body corporate may appoint, without conducting an
election, a
person who is eligible to be a member of the committee to fill a
vacancy on the committee.
(2) If 1 co-owner of a lot is an elected
member of the committee, not more than 1 other co-owner of the lot may be
appointed under this
section as an ordinary member if necessary to bring the
total number of voting members of the committee to 3.
(3) A person
must not be appointed under this section as a member of the committee if,
following the appointment, the committee would
number more than the required
number of members for the committee.
22D Engagement of body corporate
manager under div 10 at extraordinary general meeting [SM, s 24C]
(1)
The agenda of an extraordinary general meeting of a body corporate held
under this division must include a motion approving a person’s
engagement
as a body corporate manager under division 10.
(2) The motion may be
considered at the meeting only if, following any appointment of committee
members under section 22C--
(a) at least 1 executive member position on the
committee is not filled; or
(b) the total number of voting members of the
committee is less than 3.
(3) If the motion is considered at the
meeting, it must be considered as the last item of business for the
meeting.
I conclude that the provisions of division 4A are directly
apposite to the situation applying to this body corporate immediately after
the
last AGM in relation to the required number of members of the committee. At that
AGM:
• 1 person was elected as an executive member of the committee; and
• the total number of voting members of the committee elected was less than 3; and
• the body corporate does not approve the engagement of a body corporate manager under division 10.
The consequence of this outcome is
that sections 22B, C and D operate and within one month of the AGM being held,
the committee member
elected (ie. Mark Howard) was required ("must") call an EGM
of the body corporate, which EGM is to be held within two months of the
AGM. At
that EGM, the body corporate may appoint, without conducting an election, a
person who is eligible to be a member of the
committee to fill a vacancy on the
committee.
The intent of these provisions is as stated in the explanatory
note for the sections: where an annual general meeting does not appoint
sufficient persons to achieve the minimum number required for a committee and
the body corporate has not engaged a body corporate
manager under division 10,
then appointed committee member(s) are required to hold a general meeting for
the purpose of appointing
additional persons to the committee or, if this fails,
engaging a body corporate manager under division 10.
This is a clear and
unambiguous statement to all bodies corporate which do not elect a committee
with the required number. In my view,
the committee elected (in this case, Mark
Howard) is not a true committee but rather is a caretaker committee who’s
immediate
responsibility is to convene a further EGM in order to attempt to form
a legal committee (that is, a committee with the required
number of members).
Its seems from the submission of the body corporate, that both Mr
Howard, the body corporate manager and the body corporate solicitors
who made
the submission are unaware of the requirements of these provisions. The
submission states at page 3.
The body corporate committee can do nothing if nominations are not received and have not been received for the last number of AGM.
This statement is clearly wrong in light of the
requirements of Division 4A. Mr Howard was required to convene a further EGM in
accordance
with the requirements of that section. He failed to do so, or at
least to call a meeting which complied with the requirements of
the division. In
the circumstances, I conclude that both the committee meeting of 20 May 2005 and
the EGM of 24 June 2005 are out
of order, and are invalid. This body corporate
was under a legislative obligation to first resolve issues regarding its
committee
before it embarked on any other issue. I consider that any other
issue, excepting perhaps an emergency, cannot be considered by the
committee
unless and until the committee has first complied with the requirements of the
division.
For these reasons, I intend to invalidate both the committee
meeting and the EGM, and to order that the body corporate must, within
six weeks
of the date of this order, hold a further EGM in accordance with the legislative
requirements set out in Division 4A (sections
22A-D) of the Accommodation
Module. I accept that the positions of chairperson, secretary and treasurer are
already filled by Mark
Howard, and that presumably Mr Howard will wish to
continue in these positions. However, this still means that there are a minimum
of two (2) and a maximum of six (6) vacant ordinary member positions on the
committee capable of being filled. I further intend to
order that the provisions
of sections 23D and 23E of the Accommodation Module shall apply to the meeting
ordered to be convened and
that the secretary and chairperson (ie. Mr Howard)
shall fully comply with the requirements of those sections in relation to the
contents of the notice of meeting and the procedures at the meeting for the
election of additional committee members. If 2 and not
more than 6 eligible
persons are nominated for the committee, than the meeting shall appoint these
persons to be on the committee
in accordance with section 22C(1) of the
Accommodation Module. Only if more that 6 eligible persons are nominated for
ordinary member
positions on the committee need an election be conducted in the
way decided by the body corporate under section 23E(2).
Once the
meeting has been conducted, the election held, and the committee is constituted
by the required number of members or alternatively,
a Division 10 Body Corporate
Manager is appointed, the body corporate committee or Division 10 manager can
then proceed to consider
other issues, including for example, those placed on
the agenda of the meeting of 24 June 2005.
I further intend to order
that with the notice of meeting required to be given in respect of the meeting
to be held in accordance
with the terms of this order, the secretary shall
forward to all owners a copy of this order which includes as an annexure a copy
of my letter to S Shilling of 15 June 2005 explaining my views that owners have
a responsibility to participate in the management
of their schemes, by for
example, being prepared to become members of the committee of such scheme. From
the terms of this letter,
all owners will have a better understanding of my
expectation that they have a responsibility to participate in the management of
their scheme. Through the terms of this order, there will be an immediate
opportunity to do this, namely by nominating for or being
willing to be
appointed as a committee member at the forthcoming meeting to be convened.
Annexure A
Your Ref:
Our Ref: RAM:0076-2005
15 June 2005
Mr S Shilling
2/3355 GOLD COAST HIGHWAY
SURFERS PARADISE QLD 4217
Dear Mr
Shilling
RE : APPLICATION 0076-2005 "AARONS" BODY
CORPORATE
I refer to the grounds of your application. At various
times, those grounds canvass alleged failures of the body corporate or committee
over a thirteen year period. Many of those alleged failures are directed towards
the current committee (Mr Mark Howard) and current
body corporate manager.
However, Mr Howard has not been a committee member for this entire period (ie.
13 years) and in fact appears
to have been an owner and committee member for a
much shorter period. Given this general observation, I require a further
statement
from you more specifically directed and focused towards the following
specific matters or issues.
Firstly, the alleged actions of Mr Howard
whilst a committee member. If, as you believe, it is the current committee which
is ineffective,
then please specify specific actions which you consider warrant
this conclusion. Whilst this information is probably available in
your material,
I consider that it is not set out in concise or specific terms. I consider a
more concise statement of these aspects
to be a reasonable expectation given the
nature of the allegations being made against both Mr Howard and the body
corporate manager.
Secondly, I note that you (and other owners for that
matter) have been in attendance at the last 3 AGM’s of the body corporate.
However, at no time have you evidenced an intention to stand for election to the
committee. It seems, given the number of nominees,
that your (and other owners)
election to the committee would have been assured had you (and / or they) simply
nominated. Given this,
I conclude that your implications that Mr Howard
effectively controls the committee and the body corporate lacks conviction.
Surely
if owners simply nominated for the committee, and were elected, then
those owners would similarly have a say in the body corporate
via the committee.
Connected with this aspect is the fact that you seek the appointment of
a permanent administrator in place of the current committee.
Your proposed
nominee is a practicing body corporate manager. My preliminary view is that what
this body corporate in fact needs,
given the alleged issues or problems
affecting it, is an effective and involved committee of owners. I do not
consider, given the
nature of the problems alleged, that a body corporate
manager would have either the requisite skills or time to effectively manage
this body corporate on the micro level required (given other professional
commitments) in place of an effective committee. This is
no reflection
whatsoever on the skills of the proposed appointee, but rather a reflection on
the nature of the problems alleged and
my view of what type of structure which
would be required to start to address these problems.
Whilst I am
prepared to take further submission on this aspect, my preliminary view is as
stated: that the proposed appointment of
a practising body corporate manager as
permanent administrator of the scheme is not the appropriate solution for the
issues or problems
alleged to be affecting this scheme. Rather, I conclude a
more effective solution would be the election or appointment of an effective
and
involved committee of owners.
This might be achieved if owners were simply
prepared to nominate for committee positions. Alternatively, it might be
achieved by
an order for fresh committee elections, which might be considered,
in light of comments made hereafter.
The usual practice of adjudicators
is to only appoint an administrator on a permanent basis as you propose (in
replacement of a functioning
committee) where there is evidence that the body
corporate is completely dysfunctional, and that all other avenues of effective
management
have been exhausted. I consider that whilst there might be some
evidence that the body corporate is not functioning effectively,
I conclude that
all avenues to achieve this have not been exhausted. In particular, it is clear
that there are vacant committee positions,
and that at successive AGM’s
owners are choosing not to nominate for vacant committee positions.
The
legislation is such that an owner, notwithstanding that they (or it, in the case
of a corporation owner) own more than one lot
in a scheme, is only able to
nominate "an individual who is a lot owner or who may be nominated by the lot
owner in accordance with
section 11(1)(b)(ii) or (iii)" (see section 14(2)(b) of
the Accommodation Module regulation). This exact equivalent of this provision
in
the standard module regulation has been interpreted in order 0521 of 2004 as
follows:
Membership of committee
As not all owners can be directly involved in the day-to-day management of the body corporate, owners elect committee members to perform this function on their behalf.
To ensure fair representation on the committee, the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) contains detailed provisions regarding the nomination and election of committee members. The Standard Module was also amended, effective from 1 December 2003, to improve the transparency of committee decision making and address issues including potential stacking of the committee to the advantage of a small number of owners, a body corporate manager, or the resident manager.[1] However, the Commercial Module leaves matters of nomination and election to be determined by the body corporate itself in the form of a special resolution (Commercial Module, 13).
And by the adjudicator in order 0780 of 2004 as
follows:
The pre 1 December 2003 position allowed an owner to nominate any number of members to the committee. As well, there was essentially no restriction on who the owner could nominate. That is, the nominee need not have any connection or association with the scheme. The legislation was amended to overcome this, and specifically to prevent the committee being "stacked by owners nominating multiple other persons for election to the committee".
Generally, subject to certain specific rules, the effect of this is that an individual owner may nominate only themselves or one other individual who is a lot owner as a member of the committee.
The explanatory notes for the amendments to the legislation provide as follows, quote:
Replacement of s 13 (Nominations to committee)
Clause 131--This clause provides in section 13(2) that a lot owner may, in response to a notice inviting nominations for election of the committee, nominate only one individual. If the nominating owner is an individual, the individual nominated could be the owner themselves, another lot owner, or a member of the owner’s family or a person acting under a power of attorney given by the owner. If the owner is a corporation, the owner may nominate one individual who is a director, secretary or other nominee of the corporation. If the lot owner is a body corporate for a subsidiary scheme in a layered arrangement of community titles schemes, the owner may nominate a representative of the subsidiary scheme. This amendment, and the amendment in clause 128, limits the possibility of a committee being stacked by owners nominating multiple other people for election to the committee. The amendment does not restrict an owner from nominating the individual for more than one committee position. ...
The above provision as to nominations must
be read in conjunction with:
the definition of "required number" of
members of the committee" in the Schedule headed "Dictionary" quote:
"required number", of members for a committee, means at least 3, but not more than the following number of, voting members--
(a) if the scheme includes 7 or more lots--7;
(b) if the scheme includes fewer than 7 lots--the number equalling the number of lots.
Section 10 headed Composition of Committee,
quote:
10 Composition of committee [SM, s 9]
(1) The committee consists of--
(a) the persons chosen to be the executive members of the committee; and
(b) if ordinary members are chosen for the committee--the ordinary members; and
(c) each person who is a non-voting member of the committee.
(2) The one person may hold the positions of chairperson, secretary and treasurer, or any 2 of the positions, in conjunction.
(3) Subject to subsection (4), the committee must consist of the required number of members for the committee.
(4) Subsection (3) does not apply to a committee mentioned in section 12(3) or (4).
(5) There must be a chairperson, secretary and treasurer, whether or not there is a body corporate manager who has been authorised by the body corporate under section 1194 of the Act to exercise some or all of the powers of an executive member of the committee.
And Section 31 headed
Voting at committee meeting, subsection (3)
(3) To avoid doubt, it is declared that a voting member who is an executive member has only 1 vote, even if the person holds more than 1 of the positions of chairperson, secretary and treasurer.
Clearly,
the consequence of these provisions is that notwithstanding that an owner might
own more than one, or even a majority of
lots, in the scheme, such ownership
does not allow them to stack or control the committee, unless as appears to be
the case here,
other owners are simply not willing to nominate and to serve on
the committee. I do not consider that it is the role of an adjudicator
to save
owners from their own failure to take some responsible to become involved in
their body corporate.
In my view the solution here is not to remove the
committee in favour of a permanently appointed administrator simply to prevent
Mr
Howard being involved in that committee. Rather it is that other (or
minority) owners be prepared to serve on the committee.
In the
circumstances, I required your submission on these specific aspects before I
will further consider the order I might make in
respect of this dispute.
However, I suggest your further submissions be guided by the above
observations.
Yours faithfully
Richard
Meek
Adjudicator
Office of Body Corporate and
Community Management
CC: The Body Corporate for
Aarons
CC: All owners who made submissions in respect of application
76-2005
[1] Explanatory Notes - Body
Corporate and Community Management
Legislation Amendment Regulation (No. 1)
2003, page 6.
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